February 28, 2009

FT: Highway to hell revisited

Highway to hell revisited

“History
reminds us,” President Barack Obama told both houses of the US Congress
on Tuesday night, “that at every moment of economic upheaval and
transformation, this nation has responded with bold action and big
ideas.” By “the nation”, Mr Obama means “the government”. We can tell
by the episodes he uses to make his point: the establishment of
universal public education, the GI Bill of Rights and – alluded to but
not named – the Highway Act of 1956, at the time of its passage the
largest public works project in US history.

Mr Obama’s praise for
the Highway Act is disturbing. In arguments over his stimulus package
and his preliminary budget released on Thursday, Republicans have made
the lazy assumption that government intervention in the economy can
never succeed. Mr Obama shows signs of the opposite error – believing
it can never fail.

EDITOR’S CHOICE

The
Highway Act probably has more defenders than detractors. But Mr Obama
should be among the latter. The act, which budgeted $25bn in federal
money to build 41,000 miles of motorway, exacerbated the very problems
Mr Obama has been most eager to solve – spoliation of the environment,
dependence on foreign oil, overburdening of state and local budgets,
abandonment of the inner-city poor and reckless speculation in
real-estate development, to name a few.

A lot of people complain
today about the rump of Republican disbelievers in Keynes, feckless
though they may be, who fiddle while Rome burns. There was no hint of
such heresy in 1956. The Senate passed the bill 89-1. Otherwise, the
political climate bore some resemblance to our own: conformism bred of
confusion. A 40,000 mile highway network had been on the wish list of
the armed forces since 1944. Eisenhower was a big backer, and had hopes
of justifying it as a stimulus during the recession of 1954. That
downturn was long past when the bill came to a vote, but the vested
interests remained, and so did the fear that one’s constituents might
think it a bit communist to vote against a highway bill.

Eisenhower had brought in General Lucius Clay, architect of the Berlin Airlift and a board member of General Motors,
to make the pitch for an earlier version. The US required highways,
General Clay said, “to disperse our factories, our stores, our people;
in short, to create a revolution in living habits”. The bill, for all
its expense, seemed a no-brainer, and legislators cast their votes
without even a hint of a sense that they might not know what they were
doing, or that sums of money big enough to do your country much good
are also big enough to do it much harm.

In 1958, the great
journalist William Whyte coined the term “sprawl”, in an article for
Fortune. He noted with horror that, a mere two years after the Highway
Act, “already huge patches of once green countryside have been turned
into vast, smog-filled deserts that are neither city, suburb, nor
country.” Developments were concentrated in random political
no-man’s-lands near interchanges and exits. Road lobbyists and real
estate developers colluded against meaningful regulation and planning,
with the result, Whyte wrote, that “development is being left almost
entirely in the hands of the speculative builder”.

As the historian Owen Gutfreund wrote in 20th-Century Sprawl
(Oxford, 2004), even before the passage of the Highway Act, most US
highway spending was promoted by industry lobbies masquerading as
consumer-advocacy groups, such as the National Highway Users’
Conference. The result was a distorted market and tax system. Just as
today’s internet businesses get more favourable tax treatment than
bricks-and-mortar shops, highways were effectively subsidised. Sales
taxes on autos were made tax deductible. Gasoline taxes were specially
earmarked to road building (as they still are).

The Act speeded
up the erosion of public transportation infrastructure, which the
federal government is now spending dearly to revive. Freight trains had
to compete against trucks that sped along taxpayer-funded roads.
Highways marred the landscape. Some of the prettiest neighbourhoods in
the US – Mt Adams in Cincinnati, the North End of Boston – were
effectively walled off from the cities they once belonged to, and the
encirclement of Detroit’s neighbourhoods by highways is often cited as
a primary cause of its decline. Plans for a superhighway to be laid
right through the heart of San Francisco were blocked only due to
massive local protests.

Whyte warned that sprawl was not just bad
aesthetics but bad economics. A subtler and more serious problem than
blight was that, for local authorities, the cost of providing utilities
and other services was exorbitant. “There is not only the cost of
running sewers and water mains and storm drains out to Happy Acres,”
Whyte wrote, “but much more road, per family served, has to be paved
and maintained.” The infrastructure network that came out of the
Highway Act had higher overheads than the one it replaced. It became a
bottomless pit of spending.

The largest building project in Mr
Obama’s Recovery Act is $27bn for roads, and there have been no
complaints that the government will have a hard time finding things to
spend it on. The US has big economic problems. But they have been made
worse, and harder to resolve, by a half-century in which, at federal
urging, the country was misbuilt.

There is an inherent bias in
favour of government projects. The successes can be mythologised
through commemoration, goading future generations to imitate them. The
failures are fixable only through equally extensive projects to undo
them. This makes it easy to forget that there is no social or economic
problem so big that a poorly targeted government intervention cannot
make it worse.